15 Best Stocks to Buy According to Hosking Partners

6. Citigroup Inc. (NYSE:C)

Hosking Partners’ Stake Value: $76,074,642

Percentage of Hosking Partners’ 13F Portfolio: 2.81%

Number of Hedge Fund Holders: 85

Citigroup Inc. (NYSE:C) is a global financial services company operating in over 100 countries, with two main segments: global consumer banking and the institutional clients group. The company’s restructuring efforts are progressing well, with nine out of fourteen consumer franchises sold or wound down by March. Its Mexico consumer business is on track for a planned IPO next year. Citigroup’s stock, trading at about 10.7 times its forward earnings—below the sector average of 16.5 times—offers an attractive investment opportunity.

CEO Jane Fraser announced on June 18 that the bank is shifting from its expansive 1990s model to a more focused vision. The company is scaling back operations, divesting businesses, and reducing its workforce to enhance stock performance and streamline operations. CFO Mark Mason described 2024 as an “inflection year,” with goals to boost full-year revenue by at least $6 billion by 2026 and cut expenses by at least $500 million.

In Q2 2024, Citigroup reported a net income of $3.2 billion and earnings per share of $1.52, with revenues increasing by 4%, driven by strong growth in its Services, Markets, Wealth, and US Personal Banking divisions. The company is working to normalize credit costs and expects reduced losses in the medium term, along with a decline in expenses in the second half of 2024, indicating a promising outlook.

Piper Sandler analysts recently initiated coverage of Citigroup, raising the price target from $70.00 to $73.00 and giving the stock an “Overweight” rating on July 15.

Silver Beech Capital stated the following regarding Citigroup Inc. (NYSE:C) in its first quarter 2024 investor letter:

“Since the beginning of 2023, Citigroup Inc. (NYSE:C) has been one of the Fund’s largest holdings. In our Q3 2023 investor letter, we laid out our core investment thesis for Citi: although the bank was an underperformer (weak returns on equity), Citi was (1) less risky than it had ever been and (2) cheaper than it had ever been. The Fund’s investment thesis for Citi featured in a November 2023 Euromoney article Citi 2.0: If she builds it, will they come?The market narrative has started to converge on our investment thesis. During the first quarter, Citi was the best-performing bank stock in the S&P 500 index. However, improvements in Citi’s operating performance have come more slowly than its share price gains. Due to this converging market perception with our own thesis, the Fund exited its position in Citi. The Fund’s stake in Citi generated a 34% gross IRR over our 14-month investment period.”